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July 21st, 2012:

Kandi Technologies Bags Largest Single Electric Vehicle Order Ever

Tom Konrad CFA

Description: KD501The Kandi KD501 Mini-EV to be leased in Hangzhou. Photo by Marc Chang.

The city of Hangzhou just signed a strategic cooperation agreement with KandiTechnologies(NASD:KNDI) and nine other companies to supply 20,000 electric vehicles (EVs) for the city’s “pilot” EV leasing program.Kandi is the only EV supplier to take part; other companies involved will supply the batteries (Air Lithium (Lyoyang) Co. Ltd.) and charging by the local utility. The utility will fund construction of a charging and battery swap station network as well as paying for the batteries.

The batteries will serve a dual use for grid stabilization, or Vehicle to Grid (V2G) technology. The batteries will be financed by charges to electricity customers because of this dual use. So, in addition to this being the largest EV sale ever announced, the project is also effectively the largest scale trial of the use of EV batteries for V2G. V2G is a concept much talked about in academic circles, but so far if has only seen small scale pilot projects in the West. Part of the problem with implementing V2G is typically the split incentives between battery owners and the utility. Battery owners naturally worry about reduced performance of their very expensive battery packs if they are used for V2G. The Hangzhou project neatly avoids this conflict of interest because the utility owns the batteries, and the EVs are only available for lease.

Financial Impact for Kandi

The program will begin in August, and is scheduled to be completed by the end of 2013. We can expect Kandi to sell EVs at a rate of over 1000 per month during implementation. Kandi’s revenues for each vehicle will be around $6800 per EV. Kandi’s gross margins are about 25% on its existing off-road vehicle business, and observers of the company tell me Kandi would be unlikely to undertake a project if it earned substantially less than that. We can expect an increase in gross profit of about $1300 to $1700 per vehicle, or about $0.70 per share annual gross profit, most of which will flow through to earnings.

Kandi is already profitable, with trailing earnings of $0.20 per share (EPS), so we can expect total EPS for 2012 is likely to be around $0.40 per share, and EPS for 2013 is likely to be around $0.80 per share based just on this deal and zero growth in the company’s existing business. The existing off road vehicle business has been growing rapidly, and additional EV orders seem likely, so $0.40 and $0.80 EPS in 2012 and 2013 should be considered a lower bound on earnings, which will most likely be higher.

China’s Aggressive EV Goals

Kandi’s rapid earnings growth could continue if Kandi manages to grab a decent share of the 500,000 EVs by 2015 and 5,000,000 EVs by 2020 goals set by the central government.

China is currently behind in implementing these EV adoption goals, largely because of the high cost of EVs from Kandi rivals such as BYD (OTC:BYDDY), and lack of charging stations. The Hangzhou pilot project, with its rapid, utility-financed build-out of charging stations and inexpensive mini-EVs from Kandi seems designed to address both these problems.

Kandi’s mini-EVs may be just what the Chinese government ordered.

Disclosure: Long KNDI

This article was first published on the author’s blog, Green Stocks.

DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results. This article contains the current opinions of the author and such opinions are subject to change without notice. This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

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Questionnaire about the Waste Management In Singapore Mission Study Trip Workshop

Download PDF : waste comments for islands district assoc (1)

Maine Voices: Likely closure of MERC should signal shift in how Maine handles waste

Cities and towns need to step up recycling, and state leaders must clamp down on waste importing.


With the Biddeford City Council’s impending decision to purchase and close the Maine Energy Recovery Co. incinerator (“Biddeford council votes to purchase MERC,” July 18), there is much cause for celebration. There’s also room for discussion about the winners and losers in the deal.

The clear winners are residents of Biddeford and surrounding communities, who can expect to breathe easier come next spring, when the incinerator is slated to cease operations.

Incinerators spew a wide array of dangerous pollutants into the air, including hazardous dioxins, for which there is no safe level of exposure, heavy metals and furans. Airborne pollutants from incineration settle to the ground, potentially contaminating soil and water, or combine with atmospheric moisture, leading to acid rain.

For Biddeford residents, after 25 years of living with odors, pollution and the accompanying health effects, this upcoming change is a welcome one.

Biddeford businesses will benefit when the city’s biggest polluter is gone and its biggest eyesore is eventually removed. (Although, as Councilor Michael Ready put it Tuesday night, “My biggest concern about the stack is what’s coming out of it.”)

Downtown Biddeford is ripe for redevelopment, and MERC’s closing could usher in a boom in new businesses.

Maine is also a winner — the closure of the state’s largest incinerator is not insignificant when it comes to public health and the environment. Make no mistake, the Biddeford City Council’s likely decision is a sound one that will bring positive change.

Not everyone is celebrating, however.

The losers in the deal — the residents of Westbrook, who are about to play host to a Casella Waste Systems-owned trash transfer station, and residents of Old Town, who bear the brunt of the state’s trash already at the Juniper Ridge landfill — are glad to see MERC go but are pushing for change at the statewide level.

The perennial question when it comes to trash, particularly in a case like this one, is “where will it all go?” The answer: Waste is not a zero-sum game. Biddeford’s gain doesn’t have to equal a loss for other communities in Maine.

The state of Maine must take a two-pronged approach when it comes to reducing trash.

First, the Department of Environmental Protection must focus on increasing diversion of waste generated here in Maine from landfills and incinerators.

Our recycling rate has hardly budged in more than a decade, and there are steps we can take to fix this.

Programs like SMART (Saving Money And Reducing Trash), which financially incentivize waste reduction, can help municipalities jump-start their recycling rate.

Large-scale composting can begin to tackle the organic waste — food scraps, yard waste and the like — that makes up a full third of the waste stream. The DEP can provide technical assistance to towns and businesses to help on these measures and others.

The second prong in the approach is to draw a line in the sand when it comes to out-of-state waste.

Maine has been importing about half a million tons of waste each year from other states. This is a considerable amount — we’re currently generating 1.7 million tons of waste each year in Maine, so the amount of out-of-state waste we import is approaching one-third.

Currently, most of this out-of-state waste goes straight to MERC and a handful of other incinerators, so the demand for this waste should be largely eliminated once MERC is closed.

Maine should not be a dumping ground for the rest of New England, and state leaders should not look to continue the trend of importing waste from our neighbors to the south.

MERC’s closing is an enormous victory for Biddeford and nearby communities. It is a tangible win for public health, for the environment and for the revitalization of Biddeford.

It should also signal a tipping point when it comes to Maine’s waste: Let’s reduce, reuse and recycle — and stop importing trash.

Tracie Konopinski of Portland is the Maine community organizer for Toxics Action Center. Ed Spencer of Old Town is a member of the Trash Tracking Network and Orono Community Forums